Business economists have quickly changed their tune about growth prospects this year, according to a recent survey. Participants in a survey from the National Association for Business Economics believe that business profits will rise 2% this year, down from the 5% that was predicted in December.
Two-thirds of the panelists have also lowered their forecasts for the inflation-adjusted national gross domestic product (also known as Real GDP). Citing “volatility of markets and data,” the panel is predicting 2.2% growth this year for the U.S. economy, compared to the 2.6% predicted in December and the actual Real GDP of 2.5% last year.
An additional 79% of the panelists downgraded the growth outlook for 2017. The majority of panelists for the survey believe that the U.S. will not reach its next business cycle peak until 2018 or later.
The Federal Reserve estimates that the average American household will have $1,000 more to spend this year due to gas savings, but more than half the economists from the survey said that consumers would use the money to either save or pay down debt as opposed to spending it.
Lastly, two-thirds of the panelists predict that the Fed will increase interest rates two more times this year. “[This brings] the median mid-point forecast to 0.88% at the end of the fourth quarter of 2016,” said Steve Cochrane, managing director for Moody’s Analytics. “This is lower than the year-end expectation of 1.13% projected in December.”